74% of fleet decision makers surveyed are actively seeking a payment solution to manage their fleet's EV charging costs over the next 12 months
Fleet decision makers are urgently seeking solutions to pay for the charging costs of electric company cars and vans, to avoid leaving drivers hundreds of pounds out of pocket.
In fact, a staggering 74% of businesses will actively seek payment solutions to manage their EVs in the next 12 months, according to a major new survey of 200 fleet decision makers by Mina and 360 Media Group (1).
Last week HMRC increased the Advisory Electricity Rate (AER) that employers can use for the tax-free reimbursement of business miles to 5 pence per mile (ppm). But this new rate still massively underestimates the true cost of recharging electric vehicles (EVs), according to Mina, the EV charging payment solution specialist.
The average pence per mile electricity cost for an electric van is actually 7.8ppm, and rises to as much as 15.7ppm for the largest vans (2). This means that a van driver covering the average 13,000 miles per year (3) would be short-changed by at least £346 per year [13,000 x (7.8-5)], with the figure likely to be much higher as energy prices continue to soar.
The problem is just as acute for company car drivers, with well below half of electric cars capable of operating at 5ppm (4) when energy tariffs were as low as 16p/kWh. Mina says tariffs are now closer to 20p/kWh.
Reimbursing company car and van drivers used to be simple when drivers could use a fuel card to buy petrol or diesel, but the process is fiendishly complicated for EVs. Not only do home charging costs disappear into drivers’ domestic energy bills, but there is also a huge range in tariffs – Mina has tracked over 370 tariff increases during the past three months due to the energy crisis.
Complicating the issue is the extreme variance between home and public charging costs. A driver might pay as little as 5 pence per kwh at home and 70 pence on the motorway.
This creates a headache for employers trying to calculate the actual cost of electricity used by their EV drivers in order to reimburse them fairly.
The research conducted by 360 Media found that just over half (55%) of companies currently rely on the official AER of just 5 pence per mile, which will never be fit for purpose, given the Increased cost of home energy, and the fact that the ratio of home and public charging is unique to the individual driver. About 35-40% of drivers (and up to 70% of van drivers) do not have off-street parking where they could install a home charger, forcing them to use much more expensive public charge points.
“Relying on the AER means many employers are underpaying their drivers without even realising,”
said Ashley Tate, CEO and Co-Founder of Mina.
Over a third (35%) of fleet decision makers are attempting to calculate their own EV mileage reimbursement rates; a complex and potentially risky process.
“Over-paying drivers for EV business miles not only erodes the savings from running EVs, but could also leave a company and its drivers on the wrong side of an HMRC investigation,”
These uncertainties help to explain why accuracy was the number one criterion for fleets when assessing EV payment solutions, and why 78% of fleet decision makers said they would be very interested in an accurate solution that removes the administrative burden for both drivers and the business.
Mina Homecharge™ is the UK’s only fleet payment solution for EV charging that accurately pays for drivers’ business mileage direct to the drivers’ home energy supplier. The company seamlessly consolidates home and public charging into a single monthly business invoice.
“Drivers on the Mina platform won’t ever suffer from ‘bill shock’ and are never out of pocket while waiting to be reimbursed by their employer for their business mileage,”
“Our mission is to make paying for EV charging radically simple, and the Mina solution does just that!”
Learn more about the Mina Solution 👉 here.
The research was conducted in October 2021 by 360 Media Group.